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HomeMy WebLinkAboutMINUTES - 05152007 - C.61 TO: BOARD OF SUPERVISORS ' . Contra { FROM: Dennis M. Barry, AICP Costa Director of Community Development County DATE: May 15, 2007 �� b SUBJECT: ALLOCATION OF $1,558,206 IN MENTAL HEALTH SERVICES ACT FUNDS TO AFFORDABLE HOUSING PROJECTS SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS 1. APPROVE an allocation of $700,000 in Mental Health Services Act (MHSA) funds to Villa Vasconcellos LP for the construction of Villa Vasconcellos senior apartment project at 1515 Geary Road in Walnut Creek. 2. APPROVE a conditional allocation of $564,322 in MHSA funds to Rubicon Programs for the rehabilitation of 909 — 919 Virginia Avenue Apartments in Richmond. 3. APPROVE a conditional allocation of $293,884 in MHSA funds to Community Housing Development Corporation of North Richmond for the construction of the Lillie Mae Jones Plaza multi-family project at 214 MacDonald Avenue, Richmond. FISCAL IMPACT No General Fund impact. MHSA funds are provided to the County on a formula allocation basis through the State Department of Mental Health. BACKGROUND/REASONS FOR RECOMMENDATIONS In November 2004, California voters approved Proposition 63, the Mental Health Services Act (MHSA), intended to "transform the public mental health system." The revenues are generated from an additional one percent tax on individuals whose incomes excICA one million Ilar annually. CONTINUED ON ATTACHMENT: X YES SIGNATURE: _RECOMMENDATION OF COUNTY ADMINISTRATOR R Ef OMMEN TION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON t5O APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN YES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Kara Douglas, 335-7223 ATTESTED Orig: Community Development/CDBG JOHN CU , CLERK cc: County Administrator OF THE BOARD OF SUPERVISORS County Counsel AND CO UTY AD NIS TOR Auditor-Controller BY. HSD, Mental Health Division EPUTY I SUBJECT: ALLOCATION OF $1,558,206 IN MENTAL HEALTH SERVICES ACT FUNDS TO AFFORDABLE HOUSING PROJECTS DATE: May 15, 2007 PAGE: 2 The population to be helped under MHSA is defined as adults and older adults who have been diagnosed with or who may have a serious and persistent mental illness, and children and youth who have been diagnosed with or who may have serious emotional disorders, and their families. According to the MHSA, the essential elements under a transformed mental health system include community collaboration, cultural competence, client/family driven services, a wellness focus and integrated services. MHSA funds in the amount of $1,558,206 are available for one-time capital expenditures for low- income and indigent individuals with psychiatric disabilities who are being served through Contra Costa County's MHSA, Community Services & Supports Program. Priorities for these funds are projects that are through the pre-development phase and needing "final" dollars in order to break ground or be completed. The Community Development Department, in partnership with the Health Services Department, Mental Health Division, issued a Notice of Funding Availability in October 2006. The following three projects applied for funds, which were considered by the Affordable Housing Finance Committee (AHFC) on March 21, 2007. The AHFC developed funding recommendations for the Board of Supervisors. Villa Vasconcellos: Resources for Community Development as Villa Vasconcellos L.P. is developing Villa Vasconcellos apartments in Walnut Creek. This project involves the demolition of an abandoned Alzheimer facility and the new construction of 69 one-bedroom units and 1 two-bedroom manager's unit on a 1 .37 acre site. Construction has begun on the project and is expected to be completed in December 2007. The 69 one-bedroom units will be affordable to and occupied by extremely low and low income seniors. Twenty-five of the units are reserved for extremely low income seniors with disabilities. The MHSA funds are intended to be used to support three units for seniors with psychiatric disabilities who are being served through the County's Mental Health Service Act FSP. The budget for this project is $20,970,935. Additional funds include City of Walnut Creek ($2,522,265), HOME Investment Partnership Act (HOME) Consortium ($2,225,000), Housing Opportunities for Persons with AIDs (HOPWA) ($351,863), Federal Home Loan Bank Affordable Housing Program (AHP) ($500,000), California Housing Finance Authority bond construction loan ($11,435,000), State Multifamily Housing Program (MHP) ($4,278,150), four percent low income housing tax credits ($8,091 ,719), and developer contribution ($1,162,234). Virginia Street: Rubicon Programs Inc. owns and manages the 6 unit Virginia Street Apartments in the City of Richmond, which it acquired in 1981. Rubicon operates the program as permanent supportive housing for adults with mental illnesses. The project was acquired using State Special User Housing Rehabilitation Program (SUHRP) financing, which restricts this project as housing for the mentally disabled. The State rent restrictions do not allow for sufficient revenue for Rubicon to maintain the property. The property is now so deteriorated that only one unit is habitable. The MHSA funds will be used to rehabilitate the project and return it to 6 units (12 bedrooms) at a rent that is affordable to tenants expected to be on Social Security Income. The estimated budget for this project is $564,332. The MHSA funds are the sole source of funding for the Virginia Street rehabilitation. Without the MHSA funds, Rubicon may have to sell the property and repay the State. These funds are contingent on a full construction estimate that includes review and approval by the County and inclusive of any City of Richmond requirements. Should the project budget be higher than the current estimate, MHSA funds will be held until Rubicon has identified a source of funds to cover the budget increase. S�f-v7 SUBJECT: ALLOCATION OF $195589206 IN MENTAL HEALTH SERVICES ACT FUNDS TO AFFORDABLE HOUSING PROJECTS DATE: May 15, 2007 PAGE: 3 Lillie Mae Jones Plaza: Community Housing Development Corporation of North Richmond (CHDC) is proposing to develop Lillie Mae Jones Plaza, which involves the new construction of 26 units on three contiguous lots between 1 st and 2nd Streets on MacDonald Avenue in the City of Richmond. The project will include one, two, three and four bedroom units, along with a community room and a manager's office. The units will be affordable to and occupied by extremely-low income households. Nine of the units r will be designated as supportive housing units for the homeless and disabled. Of those units, two will be designated for persons living with mental illness. The preliminary development budget for this project is $9,408,656. As proposed, MHSA funds will be used for construction costs. Additional sources of funds include City of Richmond ($2,734,000), HOPWA ($300,000), MHP ($2,583,332), low income housing tax credits ($3,336,324), and AHP funds ($156,000). These funds are contingent upon the developer securing the balance of financing needed by October 31, 2007, including project-based rental subsidies, and construction commencing by December 2007 to ensure timely expenditure of MHSA funds. Staff will return to the Board at a future date to request a determination pursuant to the California Environmental Quality Act findings and approval of legal documents. Required legal documents for these transactions will include, but may not be limited to the escrow instructions, loan agreement, regulatory agreement, promissory note, deed of trust and security agreement, subordination agreement, and estoppel certificate. MHSA funds will be lent with no interest for 20 years, with an option to extend for an additional 20 years. MHSA funds will be in the most junior lien position in both the construction and permanent financing phases. Due to the high construction costs and limited revenue from the restricted rents, the total amount of the financing provided to the project may exceed the value of the completed project. Even though equity investment in the Villa Vasconcellos and Lillie Mae Jones Plaza projects is substantial compared to the amount of long term debt, the partnership agreements have numerous safe guards of the investors equity. These safeguards essentially subordinate the County's debt to the investor's equity. Therefore, the County funds may not be fully secured through the value of the property.